TON Strategy Co Revenue Disclosure

Revenue Recognition

 

The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) ASC 606, Revenue from Contracts with Customers (“ASC 606”).

 

The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes

 

(1) identifying the contract(s) or agreement(s) with a customer,

 

(2) identifying our performance obligations in the contract or agreement,

 

(3) determining the transaction price,

 

(4) allocating the transaction price to the separate performance obligations, and

 

(5) recognizing revenue as each performance obligation is satisfied.

 

A performance obligation is a promise in a contract to transfer a distinct product. Performance obligations promised in a contract are identified based on the goods that will be transferred that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. Performance obligations for each segment are described below within each segment’s discussion of revenue recognition.

 

Pursuant to ASC 606, revenue is recognized when performance obligations under the terms of the contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is recognized in an amount that reflects the contractual consideration that the Company receives in exchange for its services.

 

TON Strategy revenue is derived from staking rewards. The Company recognizes staking rewards as revenue in accordance with ASC 606. As the amount of rewards are not known by the Company until a validation activity is completed, the staking rewards are constrained under the Topic 606 guidance on variable consideration. Staking rewards are recognized as revenue at the end of each validation round, or block processing time, or when earned and measurable and to the extent that it is probable that a significant reversal would not occur. The amount of revenue recognized is measured at fair value and is presented net of validator or other protocol fees. The Company acts as an agent in staking transactions as it provides access to its TON to third-party validator operators who perform the technical validation responsibilities on the blockchain.

 

For the MARKET.live segment, revenue is primarily derived from recurring service contracts that include social commerce solutions such as creative production, influencer management, and online store creation and maintenance for platforms like TikTok Shop. Clients are sourced through partnerships with TikTok Shop, other social media platforms, and affiliated brand agencies. Revenue is generally recognized over time as services are performed as measured by the progress of completion on the performance obligations as defined in the contract with the customer.

 

MARKET.live performance obligations for other services include special projects, content creation, livestream management and platform access. These performance obligations are distinct and contribute to overall service delivery and client management.

 

GO FUND YOURSELF (GFY) generates revenue from fees charged to issuer clients for production, post-production, and marketing services. The transaction price is based on the contractual fee agreed upon with each issuer. Consideration may be received in cash, convertible promissory notes, or equity instruments. Non-cash consideration is measured at fair value at contract inception in accordance with ASC 606 (see Note 4 – Investments and Fair Value Measurements).

 

The fair value of non-cash consideration is determined in accordance with ASC 820, which establishes a fair value hierarchy that prioritizes observable inputs. Equity instruments are generally valued using quoted market prices in active markets for identical assets (Level 1 inputs). If quoted market prices are not available, the Company utilizes observable inputs such as recent transactions in the issuer’s securities or comparable market data (Level 2 inputs). In the absence of observable inputs, the Company estimates fair value using unobservable inputs, including internally developed assumptions (Level 3 inputs). The fair value of convertible promissory notes is estimated using valuation techniques that consider contractual terms, market interest rates, credit risk, and other relevant factors, consistent with Level 2 or Level 3 inputs depending on the availability of observable data.

 

The Company’s contracts typically include two performance obligations: (i) onsite production services and (ii) post-production and distribution services, including airing content on the Cheddar network. For the GFY Show, performance obligations include the shoot date production services and post-production services, which include editing services to create clips from the Show that the client issuers can distribute across social media and utilize in connection with their marketing initiatives. These performance obligations are distinct and contribute to the overall service delivery and client issuer engagement. The Company has concluded that all performance obligations are distinct, as each service is separately identifiable and provides benefit to the customer.

 

The transaction price is allocated to each performance obligation based on their relative standalone selling prices (“SSP”). As SSP is not directly observable, the Company estimates SSP using an expected cost-plus margin approach, which considers the expected costs to fulfill each performance obligation and an appropriate margin based on historical experience and market conditions.

 

The Company evaluates each performance obligation to determine whether it is satisfied over time or at a point in time. The Company has concluded that both onsite production services and post-production and distribution services are satisfied at a point in time, as control of the services is transferred to the customer upon completion of each respective service and the customer does not simultaneously receive and consume the benefits as the services are performed.

 

Based on this assessment, approximately 87.5% of the transaction price is attributed to onsite production services and is recognized at a point in time upon completion of filming, when control of the production deliverables transfers to the customer. The remaining approximately 12.5% is attributed to post-production and distribution services and is recognized at a point in time upon completion of those services, including delivery and airing of the content.

 

Revenue is recognized when the Company satisfies its performance obligations by transferring control of the services delivered to the customer.

 

 

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net sales in the consolidated statements of operations. Revenues during the years ended December 31, 2025 and 2024, were substantially all generated from clients and customers located within the United States of America.